A tale of two subsidies; has the government given up on renewables?

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Today (October 8) saw news that a second solar firm, Climate Energy, has gone bust in the last two days following the news that the Mark Group was forced into administration yesterday. With over 1100 jobs lost (in two days, only 1000 down on Redcar Steel plant which has received national attention), both firms claimed cuts in government subsidies as a major contributing factor to their demise. The cuts are part of a range of cuts to both wind and solar subsidies, which raise increasing question marks over the government’s green credentials.

The latest proposal for cuts to the feed-in-tariff for small-scale solar installations would be for almost 90% from 1 January. This is on top of news in June that 250 planned onshore wind farms are likely to be cancelled because of an early end to subsidies. No wonder the renewables industry are up in arms. The head of policy for the Solar Trade Association, Make Landy, described the cut to solar feed in tariffs as “the antithesis of a sensible policy for achieving better public value for money while safeguarding the British solar industry.”

It is true to say that subsidies are there to bring new technologies to maturity, so that technology costs fall and consumers and the market can achieve better value. This is the argument that UK Environment Secretary, Amber Rudd makes for the cuts. And on wind, she might be right, as just today figures from Bloomberg New Energy Finance showed that onshore wind power is now the UK’s cheapest form of energy. For each megawatt per hour of energy, onshore wind costs $85, vs coal ($115) and gas ($114), due to changes in EU carbon emissions regulations to tackle climate change. Solar on the other hand is not as mature, with some experts saying this technology is 5 years away from being competitive.

However, despite onshore becoming competitive in cost, the political blocks to it – onshore wind being unpopular in the typically rural Conservative constituencies where it must be based – mean it is not going to be the widespread energy source that it could be. This political block is best summed up by previous Energy Minister John Hayes who described them as ‘peppering’ the countryside.

So a tale of two subsidies, one that has delivered a competitive technology in wind, and one that has not in solar. But, sadly both seem to have failed to deliver the jobs and industry potential that was once hoped for. Which brings us back to the government and renewables policy.

Just as we have had a tale of two subsidies, it seems within the government, or rather the Conservative party that there is a tale of two conflicting sides. First those who do not see the benefits in renewables versus the costs. Most prominent of these is the Chancellor George Osborne, whom has been accused of putting through a raft of policy changes which will raise emissions. As his former parliamentary private secretary, Rudd is being argued to be attempting to please Osborne to get wider climate change policy through, by removing renewable subsidies.

On the other side, Conservatives such as Zac Goldsmith, the next Conservative candidate for Mayor of London. In his speech to conference this past Tuesday, he declared that he wanted London to be the greenest city on earth. Others in the Conservatives also share this support for renewables, such as Richard Warburton MP, who described the cuts to solar feed in tariffs as ‘draconian’, very much in a Dickensian sense (for those wondering about the choice of blog title).

It is true the UK needs a wide variety of fuels in its energy mix, such as for example, fracking. But a growing lack of support for renewable energies, not only risks further negative impacts to climate change, but the loss of major industries and jobs for the future which the UK would be foolish to give up.

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About the Author

About the Author: Crispin Oyen-Williams is the Director and Founder of Business Innovate. .

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